Chennai: With the reduction in input cost, cement prices declined 8 per cent in April. This along with higher demand saw cement sales volumes moving up.
Average cement prices declined by 8 per cent on a year-on-year basis in April 2024 to Rs 340 per bag. In the past two years, cement prices have come down on a yearly basis. In FY2024, the average prices were at Rs 365 a bag compared to Rs 375 a bag in FY2023, finds ICRA.
The decline in prices was mainly due to lower input costs. In May 2024, coal prices declined by 45 per cent YoY to $114 per metric tonne, and pet coke prices were down 10 per cent to Rs 11,630 per metric tonne. Diesel prices declined by 2 per cent to Rs 88 per litre. In the first two months of FY2025, the prices of coal, pet coke and diesel were lower by 50 per cent, 16 per cent and 2 per cent, respectively, resulting in reduced input costs.
According to Crisil, heightened competitive intensity due to entry of new players, 40-42 MT of capacity additions, and benign cost pressures catalyzed the cement price correction in FY24 after four consecutive years of price rise at a CAGR of 4 per cent from FY20 to FY23.
Lower prices along with higher demand helped the cement volumes go up by 11 per cent YoY in March 2024. In March 2024, cement volumes were at 41.7 million metric tonnes. Overall, in FY2024, volumes increased by 9 per cent to 426 million metric tonnes. In FY2025, volumes are likely to grow by 8-9 per cent to 460-465 million metric tonnes, supported by demand from the urban housing and infrastructure sectors.
